‘Yes, but I have checks!’

So, we have the real estate crisis, the bank crisis, the automaker crisis, rising unemployment and severe state budget deficits. It’s not a pretty picture.

Things will get better, but in the meantime the tapestry of woe has not fully unfurled. We have at least one more financial mess looming: the credit card crisis.

The Federal Reserve reports that Americans had $951 billion in credit-card debt in 2008. This figure is certainly going to rise this year, as thousands use their credit cards just to stay above water.

But worse, it’s likely that a whole lot of those people aren’t going to keep up their credit card payments. This is bad for them, obviously, but it’s also bad for the banks that are already drowning from the real estate collapse.

“It’s a particularly vicious economic circle,” writes Arianna Huffington in her HuffingtonPost.com blog. “Every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials like food, housing and medical care — the costs of which continue to escalate. But as their debt rises, they find it harder to keep up with their payments. When they don’t, banks, trying to offset losses in other areas, then turn around and hike interest rates and impose all manner of fees and penalties … all of which makes it even less likely consumers will be able to pay off their mounting debts.”

My wife and I often find ourselves reciting a line from a not-very-good 1980s sitcom called “Perfect Strangers.” You might recall that the show was about two cousins, Larry, a regular guy from Wisconsin, and Balki, an immigrant from a small Mediterranean island who knew little about American culture. The show revolved around Balki learning the mysterious ways of the First World.

Well, the line we remember comes from an episode in which Balki goes on a spending spree after getting a checking account. Balki’s level-headed cousin tries to explain to him that he can’t spend money he doesn’t have. Balki responds, “Yes, but I have checks!” From his point of view, as long as there are checks in his checkbook, he doesn’t understand why he can’t use them.

More than a few times, I’ve tried out this line on my wife when I’ve had an urge to buy something totally unnecessary. It almost never works.

This is akin to the way a lot of us handle our credit cards.

I’ve never gotten into a bind over the abuse of credit cards, thank goodness, but I have, many times, seen them as an opportunity to satisfy an immediate desire. Once upon a time, people scrimped and saved in order to buy something of value. Today, we just slap down a credit card and worry about paying for it later.

All this profligacy has led to a collective $951 billion in credit card debt.

The first mistake is thinking we must have things we can’t really afford. Whether it’s a big house, fancy car or big-screen TV, more often than not we’re setting our sights on a more extravagant item than we really need.

Consider all the foreclosed homes across the valley. Many of them were purchased by people who had no business buying them in the first place.

Sure, the mortgage companies deserve some of the blame for relaxing their standards. But the buyers darn well should have known that their incomes could not support the monthly payment on a $500,000 house.

Some car buyers are equally unrealistic. Does anybody really need a Hummer? Set aside for a minute the obscenely low gas mileage. The only conceivable reason to buy a Hummer is as some sort of aggressive status symbol. Automobile repossessions often are a case of somebody buying more vehicle than they need.

Huffington and members of Congress are justifiably angered by banks jacking up interest rates and imposing fees for credit card holders who are having trouble paying their bills. But while gouging customers is wrongheaded, it’s equally important that Americans start taking greater responsibility for their behavior. When President Obama recently announced his $75 billion housing rescue plan, some complained that it wouldn’t help everybody who’s in a tough spot. Well, that’s exactly as intended. The president explained this week in his speech to a joint session of Congress:

“We have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and refinance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford.”

I’m OK with that. I hardly think I’m alone in feeling uncomfortable bending over backward for those folks.

The lesson for today: Try as hard as you can to save your credit cards for emergencies only. If you want a big-screen TV — the urge is understandable — save up and pay cash. You’ll be doing yourself and your country a service.

Geoff Schumacher (gschumacher@reviewjournal.com) is the Review-Journal’s director of community publications. His column appears Friday. Read his blog at www.lvrj.com/blogs/schumacher.

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